Conflicting Obamacare Rulings Set Stage For Supreme Court Face-Off

Good morning. Let's try to figure out, if we can, what the courts are saying about the Affordable Care Act. Yesterday, two federal appeals court panels issued conflicting decisions on an issue with the potential to gut the health care overhaul. The two rulings could set the stage for another epic Supreme Court faceoff - this time focused on just three words of the statute. NPR legal affairs correspondent Nina Totenberg reports.

NINA TOTENBERG, BYLINE: One of the opponents of the law initially called those three words a glitch. But in the hands of skilled litigators, that glitch has become a stake aimed at the heart of Obamacare and its health care exchanges. The exchanges were meant to be state-run marketplaces, where consumers could shop online for health insurance and, where qualified, get federal subsidies. Under the law, each state is to set up its own exchange. And if it refuses, the federal government is to step in and do the job on behalf of the state. Two-thirds of the states have deferred to the federal government to set up these exchanges - most because of opposition from Republican leaders within the state and some because of state problems in setting up the exchanges on their own. The problem, the glitch as it were, is the language in one subsection of the 950-page law. That subsection says that subsidies can be paid to low-income insurance buyers who purchase insurance policies quote, "from exchanges established by the states." Opponents have seized on that language to argue that people buying insurance from the federally-run exchanges are ineligible for subsidies. Until yesterday, every court that looked at that argument had rejected it. But yesterday, a three-judge panel of the U.S. Court of Appeals for the District of Columbia agreed that the law as written forbids subsidies in the 36 federally-run exchanges. The vote was 2-to-1. Hours later, a three-judge panel in Richmond unanimously reached the opposite conclusion. For Obamacare, the issue is one of life or death.

TIMOTHY JOST: They could have just catastrophic consequences.

TOTENBERG: Washington and Lee professor, Timothy Jost, explains that because the health code law provisions are so interconnected, a ban on subsidies through federally-run exchanges would have cascading effects. Not only would millions of Americans see their premiums jump as much as 75 percent, but employers in those 36 states would no longer face penalties for failure to provide employee health insurance. And the individual mandate would, in addition, be greatly weakened. Obamacare opponents, however, say the plain language of the statute says subsidies can only be paid through state exchanges. Sam Kazman is general counsel for the Competitive Enterprise Institute, which helped coordinate and fund the court challenges based on this provision.

SAM KAZMAN: When Congress writes the law, agencies cannot rewrite the laws. I think that is the most important principle out of this case.

ELIZABETH WYDRA: The argument frankly is made up out of whole cloth in an attempt to get rid of a law that political opponents do not like.

WYDRA: They lost that argument in the political arena and now they're trying to gut Obamacare through the courts.

TOTENBERG: So what happens now? Not clear. The Obama administration plans to appeal the D.C. panel ruling to the full 11-judge court, while the anti-Obamacare forces, who lost in the Fourth Circuit, are planning to go directly to the U.S. Supreme Court. Ordinarily, this might look like the kind of circuit split the Supreme Court would move on right away to resolve. But if the D.C. court agrees to a full-court review - and most expect it will - that would void the decision of the three-judge panel immediately. Presto - no circuit split and there would be no pressing reason for the Supreme Court to jump willy-nilly into another highly-charged political controversy. On the other hand, it might want to leap right in. Either way, nothing will happen fast. The earliest would be a decision next year. And in the meantime, the Obama administration says it will continue to pay subsidies to one and all qualified by income. Nina Totenberg, NPR News, Washington. Transcript provided by NPR, Copyright NPR.